International Oil Companies: Dragon Oil

Dragon Oil logoName: Dragon Oil

Based in: Dubai

Dragon Oil plc is an international oil and gas exploration, development and production company, quoted on the London and Irish Stock exchanges (Ticker symbol: DGO).

The corporate headquarters are located in Dubai, UAE. Dragon Oil has a primary listing on the Irish Stock Exchange and, since 6 April 2010, has been designated as a premium listing on the London Stock Exchange.

Fields in Iraq: Block 9

From the company’s website:

In May 2012, a consortium of companies including Dragon Oil was awarded an exploration, development and production contract (EDPSC) for Block 9 in Iraq’s fourth bidding round. 

Block 9 is located in the Basra province. Unlike the three previous bid rounds, which offered contracts to foreign energy firms to boost output at existing oil and gas fields, this time Iraq auctioned acreage earmarked for exploration.

Dragon Oil jointly bid with Kuwait Energy in respect of Block 9.  Kuwait Energy is the operator in the EDPSC for Block 9, participating with a 70% contractor share, with Dragon Oil at 30%.

The consortium’s bid for Block 9 was awarded on the basis of a remuneration fee of US$ 6.24 per barrel of oil equivalent.  Compared to the previous bid rounds in Iraq, there was no stipulated plateau production target for blocks awarded in this bid round.

The contract was initialled by the Iraqi Ministry of Oil and the consortium on 16 July 2012 and the final services contract was signed on 27 January 2013.

If Block 9 is found to be commercial during the five-year exploration period, during which time the consortium is eligible for a possible renewal for another two years twice, the consortium is automatically eligible for 20-year development and production phases, extendable by a further five years.

The work commitment on the block within the initial five-year exploration period will include de-mining, seismic acquisition and interpretation and drilling of an exploration well.

The consortium completed an environmental impact assessment and environmental baseline studies, as part of the consortium’s contractual obligations, in preparation for de-mining work and seismic acquisition. De-mining activities commenced in early June 2014. 3D seismic acquisition activities are planned for 1H 2015.

The consortium spudded the exporation well using a drilling rig from the Iraqi Drilling Company (IDC) on 25 March 2014. On 10 September 2014, we along side our partner Kuwait Energy announced our first oil discovery at Block 9. The successful discovery was at the consortium’s first target, the Mishrif formation at 2,700 meters, in its Block 9 exploration well, ‘Faihaa-1’, located in Northern Basra, Iraq.

Preliminary tests of the Faihaa-1 Mishrif formation resulted in a flow rate of circa 2,000 barrels of oil per day (bopd) and c. 3,400 bopd of 20 API oil on 32″/64″ and 64″/64″ chokes, respectively.

Later in the year, in December, the partners reported their second oil section discovery in the second target, the Yamama formation, reached at 4,000 meters in the same Faihaa-1 exploration well. Preliminary open hole tests of the Faihaa-1 Yamama formation resulted in oil flow rates of c. 5,000 and 8,000 bopd of 35 API crude oil on 32”/64” and 64”/64” chokes, respectively.

The report from an independent petroleum engineer incorporating the results of testing the Mishrif formation indicated contingent 2C oil resources of 198 million barrels and contingent 2C gas resources of 56 Bscf net to Dragon Oil on a working interest basis.

More detailed testing on both formations will be conducted in the cased hole to help evaluate the commerciality of the findings. The consortium’s strategy is to accelerate the evaluation of the Faihaa-1 discovery by drilling two appraisal wells in 2015 in order to fast track the development.

For latest news on this company’s activities in Iraq please click here.

A full list of International Oil Companies (IOCs) operating in Iraq under licences granted by the Ministry of Oil in Baghdad can be found here.